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2019 (3) TMI 1 - HC - Income TaxStay petition - recovery proceedings - payment of 15% of the disputed demand - AO rejected petition by way of a non-speaking order - HELD THAT - AO insisted on payment of significant portions of the disputed demand prior to grant of stay resulting in extreme hardship for tax payers. Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. As relying on MAHENDRA MILLS AND ANOTHER 2000 (3) TMI 3 - SUPREME COURT notwithstanding the assessee may not have specifically invoked the three parameters for the grant of stay, it is incumbent upon the assessing officer to examine the existence of a prima facie case as well as call upon the assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. Set aside impugned order dated 25.01.2019. AO is directed to pass orders de novo on the stay application filed by the petitioner in the light of the discussion as aforesaid, after hearing the petitioner, within a period of four weeks from date of receipt of a copy of this Order
Issues Involved:
1. Challenge to the order dismissing the application for stay of recovery of disputed demand. 2. Parameters for granting stay of disputed tax demand. 3. Compliance with CBDT Circulars and Instructions. 4. Requirement for a speaking order by the Assessing Officer. Detailed Analysis: 1. Challenge to the Order Dismissing the Application for Stay of Recovery of Disputed Demand: The petitioner, an assessee, challenged an order dated 25.01.2019 by the respondent, which dismissed her application for stay of recovery of a disputed tax demand. The application for stay was filed on 19.01.2019, following an income tax assessment order dated 24.12.2018 for the assessment year 2016-17. The petitioner had also filed a statutory appeal before the Commissioner of Income Tax (Appeals) on 22.01.2019, which was pending. 2. Parameters for Granting Stay of Disputed Tax Demand: The parameters for considering the grant of stay of disputed demand include: - Existence of a prima facie case. - Financial stringency, which encompasses irreparable injury and undue hardship. - Balance of convenience. These factors must be applied by the assessing officer when exercising discretion to grant or reject a stay request. 3. Compliance with CBDT Circulars and Instructions: The petitioner cited Instruction No.96 dated 21.08.1969 from the Central Board of Direct Taxes (CBDT), which states that no recovery should be effected where the assessment is substantially higher than the returned income. This instruction is binding on all Income Tax Authorities under section 119 of the Income Tax Act, 1961. The petitioner argued that the assessment in question was 'high pitched,' with the assessed income being several times higher than the returned income, warranting a complete stay of recovery. CBDT Instruction No. 1914, issued on 21.03.1996 and modified by subsequent Office Memorandums, outlines the procedure for recovery of outstanding tax demands and the guidelines for staying such demands. The guidelines emphasize that stay petitions should be disposed of within two weeks, and decisions should be communicated promptly. The guidelines also allow for the imposition of conditions, such as requiring security or partial payment, to safeguard revenue interests. 4. Requirement for a Speaking Order by the Assessing Officer: The court found that the assessing officer's order rejecting the stay application was non-speaking and lacked consideration of the relevant factors and CBDT guidelines. The order merely stated that filing an appeal is not a ground for stay and directed immediate payment of the demand. The court emphasized that the assessing officer should have issued a speaking order, taking into account the conditions for granting stay and the relevant CBDT Circulars. The court referred to the Supreme Court's observation in Commissioner of Income Tax vs. Mahindra Mills, which highlighted the duty of tax officers to assist taxpayers in claiming reliefs they are entitled to, even if not explicitly claimed by the taxpayer. Conclusion: The court set aside the impugned order dated 25.01.2019 and directed the assessing officer to reconsider the stay application de novo, in light of the discussed parameters and CBDT guidelines, and to pass a speaking order after hearing the petitioner within four weeks. The court refrained from commenting on the merits of the assessment and disposed of the writ petition without costs.
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